Alphabet’s Valuation Boosted by Autonomous Driving Unit’s Landmark Funding

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As Alphabet prepares to release its quarterly earnings, the company is gaining momentum from an unexpected source. Its long-mocked "Other Bets" division has delivered a tangible valuation anchor, with the autonomous vehicle subsidiary Waymo securing significant new investment at a staggering valuation. This development reshapes the investment narrative ahead of the conglomerate's financial results.

All eyes are on Alphabet's upcoming report for the fourth quarter of 2025, scheduled for release after the U.S. market closes on Wednesday, February 4. While past performance will be scrutinized, analysts are more focused on the drivers for 2026.

Consensus estimates from Wall Street project:
- Revenue: Approximately $111.3 billion, representing growth of roughly 15% year-over-year.
- Earnings Per Share (EPS): Forecasts range between $2.63 and $3.09.

The post-earnings conference call will likely center on the performance and outlook for Google Cloud. Analysts anticipate that demand has been bolstered by increased enterprise adoption of the Gemini 3 AI model. Equally critical will be management's 2026 capital expenditure (CapEx) guidance. The scale of planned investment in TPU chips and data center infrastructure to support growing AI workloads will be a key determinant of future profitability.

Waymo's Funding Resets Expectations

In a major development, Waymo recently closed a new funding round, raising $16 billion. This capital infusion places an implied valuation on the autonomous driving unit of about $126 billion. Beyond the sheer magnitude, the critical signal for investors is the participation of external backers, validating the business's potential.

For Alphabet shareholders, this is a pivotal shift. Projects like Waymo have historically been viewed as a drag on corporate margins. This concrete, third-party valuation effectively establishes a "floor" for these non-core ventures. It fuels expectations that the robotaxi business is moving closer to commercial scalability and financial independence, potentially through expansion into major U.S. cities beyond initial pilot programs.

Regulatory Hurdles Persist Amid Market Strength

Alphabet's equity has enjoyed considerable tailwinds, with the stock reaching a new 52-week high at $348.25. This rally is attributed not only to AI advancements but also to a stabilizing digital advertising market.

However, challenges remain. A federal judge ruled in January that Google must face a consumer antitrust lawsuit concerning its dominance in online search. While the Waymo valuation provides a short-term catalyst, ongoing regulatory scrutiny remains a persistent theme that will influence the outlook for the new fiscal year.

Ultimately, the immediate future hinges on two tests. Tomorrow's results must demonstrate that cloud growth and profitability can justify elevated expectations. Furthermore, the forward guidance on 2026 investment spending will reveal the true cost of Alphabet's next major step in the AI race.